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Analysis

General election: Is the UK using Scottish resources to balance its books?

The SNP says the Treasury has pocketed 拢340bn in tax revenues from the North Sea but left Scotland with nothing.

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On today's Campaign Check, Ed Conway investigates the SNP's claim that Scotland's resources are used to 'balance the UK's books'.
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Opponents of Scottish independence insist the country "is not good enough or rich enough to be independent", says Nicola Sturgeon.

But when those same Westminster politicians need to balance the books "they always seem to find billions of pounds of Scottish resources to do that for them", the SNP leader claimed as she launched her party's election manifesto.

It's a typical argument deployed by those who want to Scotland to break away from the rest of the UK. But is it true?

At the centre of that claim are the tax revenues earned from the North Sea.

Ms Sturgeon points out that the UK Treasury has pocketed £340bn from the industry since the discovery of oil and gas reserves in the region.

But she compares the way that money has been used unfavourably with Norway, which has deployed its revenues from the sector to build up a sovereign wealth fund whose value recently reached a record high of nearly $1.1tn (£847bn).

Scotland, by contrast has been left with nothing, the SNP leader complains.

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Is she right?

Official Scottish government spending and revenue figures show the picture has been changing in recent years.

Scottish government revenues have slumped in recent years
Image: Scottish government revenues have slumped in recent years

First of all, they reveal that spending has been consistently above the UK average over the last couple of decades hovering at above 9%.

That's higher than Scotland's share of the UK population - partly because Scotland has to spend more per head to fund public services in many sparsely-populated rural regions.

But when taking into account that North Sea oil and gas income, revenues have also been above the UK average - and even at times higher than spending - for much of the past couple of decades.

So the SNP is right to say that for much of recent history the UK has pocketed a lot of Scottish tax.

But that North Sea revenue stream has been drying up in the last few years - as the oil price has weakened and production fallen while tax changes have also taken their toll.

That slump in revenues from Scotland has taken it below the UK average and means its budget deficit - the amount it has to borrow each year - is about 7% of its national income.

That's seven times the level of the rest of the UK.

Scotland would have a bigger deficit than all other major economies measured by the IMF
Image: Scotland would have a bigger deficit than all other major economies measured by the IMF

Ms Sturgeon says if it gains independence, Scotland would be 16th most prosperous economy - in terms of GDP per head - in the OECD group of developed nations.

But a comparison of international deficit levels show Scotland would have a higher fiscal shortfall than every major economy tracked by the IMF - including the likes of Spain, Italy and the US.

And by that comparison it's Norway which is doing best - which helps explain how it can build up the kind of sovereign wealth fund that Ms Sturgeon wishes Scotland could have.

Of course, Nicola Sturgeon has an answer to some of this.

She says an increasing share of Scotland's energy is from renewable sources and much of it is being exported to the rest of the UK.

The SNP leader also says billions will be saved by scrapping the Trident nuclear weapon project.

Unfortunately, unlike the other main Westminster parties, the SNP hasn't fully spelled all this out in a costings document.

And as for Nicola Sturgeon's claim that UK politicians use Scottish resources to balance the books - it may have been true once, but it isn't anymore.